Investment Banker Wisdom

This one is reeeeeally hilarious guys! (forwarded to me by one of my friends)

The investment banker was at the pier of a small coastal
Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The investment banker complimented the fisherman on the quality of his fish and asked how long it took to catch them.

The fisherman replied, only a little while.

The investment banker then asked why didn't he stay out longer and catch more fish?

The fisherman said he had enough to support his family's immediate needs.

The investment banker then asked, but what do you do with the rest of your time?

The fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life, senor."

The investment banker scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You can leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise."

The fisherman asked, "But senor, how long will this all take?"

To which the American replied, "15-20 years."

But what then, senor?

The American laughed and said that's the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.

Millions, senor? Then what?

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

;-)

Investment banking for dummies

Ever heard about Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Jefferies & Co etc.? Ever thought what these guys do? Well...they make billions of dollars every year through investment banking. If you are a neophyte and new to the world of finance then you must have come across the term Investment banking. Investment banks assist public and private corporations in raising funds in the Capital Markets, as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.

An organization may generate funds in two different ways through investment banking:

• They may draw on public funds through the capital market by selling stock
• They may seek out venture capital/private equity in exchange for a stake in their company

Investment Banks also do a large amount of consulting. Advice on mergers and acquisitions, on when to make public offerings etc. is given to the companies. The line between investment banking and other forms of banking has blurred in recent years. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable. Large financial-services conglomerates combine commercial banking and investment banking. Prominent among these are ABN Amro, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Rabobank, UBS.

Careers in IB are lucrative and most sought after in the money-market world. A career in investment banking may involve extensive traveling, grueling hours and a cut-throat lifestyle. Although IB is highly competitive and time intensive, it also offers huge financial incentives ;-)

Inflation: Are Banks Responsible?

“That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium [paper, and now not even paper]…that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied.”

—Thomas Jefferson to Abbe Salimankis, 1810

Now this statement seems to be absolutely absurd!! After all who can dare question a bank's role in the development of any economy? I, for one, am a banking enthusiast but sometimes I ponder whether banks could be held responsible for inflation.

Over 95% of the world's population does not understand the meaning of “dividend” , “mutual fund sales” and “investment-banking fees” but thanks to these three things, the Royal Bank of Canada made record profits of 1.49 billion dollars in the first quarter—which, from a purely instinctive point-of-view, seems STUNNINGLY OUTRAGEUOS to me!

By doing nothing-productively-tangible for the world—in fact by simply creating money—are banks nothing more than an aspect of that part of the machine that endlessly drives up inflation by devaluing currency?